Table of Contents conversion in the module itself. Due to the fact that such customers may not seek to make a profit directly from the manufacture of these products, they may have the ability to manufacture competitive products at a lower cost than we would charge such customers. As a result, these customers or potential customers may purchase fewer of our systems or sell products that compete with our systems, which would negatively impact our revenue and gross profit. Our recent and planned expansion into existing and new markets could subject us to additional business, financial and competitive risks. We currently offer solar energy systems targeting the residential and commercial markets throughout the world, and we intend to expand into other international markets. Our success in new geographic and product markets will depend on a number of factors, such as: • acceptance of microinverters and batteries in markets in which they have not traditionally been used; • our ability to compete in new product markets to which we are not accustomed; • accurate forecasting and effective management of inventory levels in line with anticipated product demand; • our ability to manage manufacturing capacity and production; • willingness of our potential customers to incur a higher upfront capital investment than may be required for competing solutions; • timely qualification and certification of new products; • our ability to reduce production costs in order to price our products competitively; • availability of government subsidies and economic incentives for solar energy solutions; • our customer service capabilities and responsiveness; and • timely hiring of skilled employees and the efficient execution of our project plan. Failure to address these new markets successfully, to generate sufficient revenue from these markets to offset associated research and development, marketing and manufacturing costs, or to otherwise effectively anticipate and manage the risks and challenges associated with our potential expansion into new product and geographic markets, could adversely affect our revenue and our ability to achieve or sustain profitability. We may fail to capture customers as we design and develop new products and update existing products. We are pursuing opportunities in energy management and energy storage that are highly competitive markets. We have made investments in our infrastructure, increased our operating costs and forgone other business opportunities in order to seek opportunities in these areas and will continue to do so. Any new product is subject to certain risks, including component sourcing, strategic partner selection and execution, customer acceptance, competition, product differentiation, market timing, challenges relating to economies of scale in component sourcing and the ability to attract and retain qualified personnel. There can be no assurance that we will be able to develop and grow these or any other new concepts to a point where they will become profitable or generate positive cash flow. If we fail to execute on our plan with respect to new product introductions, or fail to adequately update our legacy products, we may fail to generate revenue in the quantities or timeline projected, thus, having a materially adverse impact on our operating results and financial stability. We continue to develop new generations of our IQ Microinverters, IQ Batteries and EV charging products. Developing new products or next generation products is complex and requires significant preparation, precautionary safety measures, time-consuming string calculations, extensive design expertise and specialized installation equipment, training and knowledge. Together, these factors significantly increase complexity and cost of installation and limit overall productivity for the installer. Our installers may not have sufficient resources or expertise necessary to sell our products at the prices, in the volumes and within the time frames that we expect, which could hinder our ability to expand our operations and harm our revenue and operating results. Enphase Energy, Inc. | 2023 Form 10-K | 20